Large banks are teaming with S&P Global to create a credit‑default‑swap index that shields investors from defaults among firms in the private‑credit space. The product, dubbed CDX Financials, would let banks such as JPMorgan Chase sell protection and offer a tradable hedge. By bundling dozens of issuers, the index aims to standardise risk that currently trades only piecemeal.

Private‑credit managers Apollo Global Management, Ares Management and Blackstone will represent roughly 12% of the basket, which also contains insurers, regional banks and credit‑card issuers. With the private‑credit market now topping $3 trillion, the index would climb when sentiment toward those firms turns negative, giving traders a quick barometer of sector stress. The instrument is being called FINDX.

Barclays’ credit strategist Dominique Toublan says banks need the tool both to trade it and to hedge their own loan exposure to private‑credit funds. Hedge funds, frustrated by costly shorting of individual issuers, see the index as a cheaper way to bet on a downturn after a wave of defaults and investor redemptions. The FINDX therefore provides a single, liquid vehicle for managing private‑credit risk.